Turkish Banks Close Russian Accounts Under Big US Pressure

Written by Henrik Rothen

Feb.01 - 2024 10:18 AM CET

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Photo: Shutterstock.com
Turkish Banks Close Russian Accounts Under US Pressure.

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Turkish banks have begun closing accounts held by Russian companies and have tightened requirements for individuals seeking to open new accounts. This move, as reported by "Lenta" citing business owners engaged in trade with Turkey, comes amid unprecedented pressure from the United States.

Financial institutions in Turkey have reportedly halted the processing of payments from Russia since the beginning of 2024, with these transactions still frozen. A source explained to the publication that the closure of accounts for Russian companies had started as early as 2022, but the trend intensified towards the end of 2023 following a decree by US President Joe Biden on December 22. The decree allows the US Treasury to impose measures against foreign banks facilitating transactions for sanctioned entities from Russia.

The banking sector in Turkey attributes this trend to sanctions and pressure from the US. A source from RIA Novosti within the Turkish banking sector mentioned, "Yes, there are such examples. This is related to the pressure from the US, unprecedented pressure."

Currently, the servicing of corporate clients with Russian roots, regardless of the country of registration, has been halted, according to Iskander Mirgalimov, a consultant for Russian business on structuring international payments. He noted that Russian companies have been advised to conclude operations with Turkish banks and close their accounts. This primarily affects businesses that used Turkey as a transit country for settlements and supplies, including oil and gas traders.

Monetary transfers between the countries have virtually ceased since January 1. Turkish banks began to reject working with Russian entities due to fears of US sanctions against them, which was noted as early as January 17. This includes both the termination of correspondent relations and the suspension of payment processing without formally closing contracts. However, exceptions exist for "foreign banks' subsidiaries in Russia."

Ekonomim reported that money transfers between the countries had practically stopped since January 1, with exporters in Turkey awaiting urgent decisions to continue trade.

Similar scrutiny of Russian clients is observed in other countries as well. Due to the risk of falling under US secondary sanctions, state banks in China have tightened comprehensive checks on Russian clients. This applies to at least two financial institutions in the country, which aim to sever ties with clients on the sanctions list. Additionally, banks will refuse to provide any services to the Russian military industry, not only in dollars but also in other currencies. Furthermore, these financial institutions seek to enhance the scrutiny of their clients for connections with Russia. This involves individuals from Russia and companies conducting business there or supplying critical goods through third countries. Chinese state banks took this step following the US Treasury's announcement of its intention to use secondary sanctions against organizations facilitating Russia's military industry purchases.

Cyprus has followed a similar path, where major banks have also tightened checks on Russian clients. The country's largest bank, Bank of Cyprus, began notifying Russian clients of the impending closure of their accounts in early April of the previous year.

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